Understanding Taxable Sales in Cincinnati
A taxable sale includes any transaction in which title or possession of tangible personal property or the benefit of certain services is, or will be, transferred or provided for a price. All retail sales are subject to the tax unless they are specifically excepted or exempted in Ohio’s sales tax law.
Exemptions from Sales Tax
In the state of Ohio, professional, personal, and insurance transactions are not taxable when any transfer of tangible personal property is a small item for which no separate charge is made.
Sales Tax on Discounts, Coupons, and Rebates
We are commonly faced with questions surrounding discounts, coupons, and rebates. Here is an explanation on how sales tax applies:
Price Discounts
- The tax base is reduced when the discount is allowed at the time of sale.
- Also qualifying are cash and term discounts allowed by a vendor and taken by the consumer.
Coupons
- The tax base is reduced when the customer uses a coupon supplied or published by the vendor free of charge.
- Note: Manufacturers’ coupons that are redeemable by any vendor and for which the vendor will be reimbursed by the manufacturer do not reduce the tax base.
Manufacturers’ Rebates
The tax base is never reduced by any form of rebate for goods and services sold.
The vendor must charge tax on the total amount charged at the time of the sale.
Trade-in Allowances
New Motor Vehicles
(Including all-purpose vehicles and off-highway motorcycles but not including manufactured homes or mobile homes):
- The tax base can be reduced on the sale of a new motor vehicle when a licensed new motor vehicle dealer accepts a motor vehicle in trade.
- No other item accepted in trade can reduce the tax base of a motor vehicle.
Example:
A new car is priced at $18,500 and the customer receives a trade-in allowance of $500, leaving the net difference $18,000.
The tax base becomes $18,000.
Note: The tax base is not reduced on the sale of a used motor vehicle when a trade-in is allowed.
New and Used Titled Watercraft and Outboard Motors
(Includes titled personal watercraft):
- The tax base can be reduced on the sale of new and used watercraft and outboard motors when a licensed watercraft dealer accepts a watercraft, watercraft and trailer, and/or outboard motor in trade.
Note: The tax base cannot be reduced when only a trailer is accepted in trade.
For all other sales, a trade-in all
Frequently Asked Questions
What qualifies as a taxable sale in Cincinnati?
A taxable sale in Cincinnati includes the transfer of title or possession of tangible personal property or certain taxable services for a price. Unless an exemption applies under Ohio law, retail transactions are generally taxable.
Are professional services in Ohio subject to sales tax?
No, professional, personal, and insurance services are not subject to sales tax in Ohio, provided that any transfer of tangible personal property involved is incidental and not separately charged.
Can using a coupon reduce the sales tax owed?
Yes, but only if the coupon is issued by the vendor and offered free of charge. In that case, the sales tax is applied to the discounted price. Manufacturer’s coupons do not reduce the tax base, as the vendor is reimbursed.
How do trade-ins affect the sales tax on a new vehicle?
If a licensed dealer accepts a vehicle as a trade-in toward a new motor vehicle, the trade-in value can reduce the taxable amount. This does not apply to used vehicle sales or to non-vehicle trade-ins.
Is sales tax reduced when trading in a trailer for a watercraft purchase?
No, sales tax cannot be reduced if only a trailer is traded in. However, the tax base can be reduced when a dealer accepts a watercraft or outboard motor (with or without a trailer) as a trade-in toward the purchase of new or used titled watercraft and outboard motors.